Help to Buy Isa flaw is ‘an honest mistake’ due to rushed process

THE flaw in the Help to Buy Isa scheme could have been prevented if the Government had formally consulted experts, critics have said, as it has emerged that the savings scheme was subjected to a lower than usual level of scrutiny.

The scheme is designed to help firsttime buyers onto the housing ladder. But as The Daily Telegraph first reported last week, a hidden clause in the small print of the flagship policy forbids savers from using the scheme for their initial deposit.

Now this newspaper has learnt that the details of the Help to Buy Isa were decided in a private “working group” in order to save time. Normally, complex financial policies go through a lengthy public consultation to give experts and the public the chance to comment on proposals and iron out terms which may unfairly discriminate.

Last night politicians said the Treas- ury had been keen to rush through the Isas so that savers could use them as soon as possible. One described the flaw as an “honest mistake”.

Jacob Rees-Mogg, a Conservative MP and member of the Treasury Committee, said: “This may well have been spotted if there had been a longer consultation, but the problem with government is that everything takes so long. What you want instead is flexibility if an honest mistake has been made, and I think this is what this is.

“Now the push is for the Government to recognise that the people who have tried to use Help to Buy Isas have acted in good faith. That good faith should now be replicated by the Government.”

The controversy is over a clause that prevents savers using a 25 per cent government bonus for their exchange deposit, although it was buried in a questions area of the Treasury’s website and does not feature on banks’ and building societies’ websites and terms.

Labour MP Chris Leslie said the Government’s handling of the Help to Buy Isa situation was turning into a “notorious case of how not to handle a policy”.

He added: “They have failed to think the basics through and have left the public thoroughly irritated as a result.”

James Daley, director of Fairer Finance, a consumer campaign group, said that banks’ legal teams should have spotted the problem.

He said: “Big banks pay their lawyers a lot of money to trawl through terms and conditions and spot onerous terms, so really they have no excuse for missing this.”